Climate change is already becoming an economic risk for Bulgaria.
Its effects are visible not only through direct losses from droughts, heatwaves, floods and fires, but also through pressure on productivity, public finances, infrastructure, energy systems and household welfare.
The economic cost goes far beyond direct physical damage.
Climate impacts are transmitted through households, firms, infrastructure, energy systems and public budgets. The scale of the final cost depends not only on the severity of hazards, but also on how quickly the economy and institutions adapt.
Damage from droughts, heat, floods and fires.
Heat and disruption reduce output and labour efficiency.
Recovery and compensation place pressure on national and local budgets.
Transport, energy and water systems face higher repair and resilience costs.
Low incomes and energy poverty reduce the capacity to absorb shocks.
Without additional adaptation, climate change could materially reduce Bulgaria’s economic output.
European Environment Agency estimates indicate cumulative losses of about 1% of real GDP under an optimistic pathway and up to 3.5% under a pessimistic pathway by 2050.
Potential cumulative real GDP loss by 2050.
Potential cumulative real GDP loss by 2050.
A large share of climate risk remains uninsured.
Insurance coverage remains below 50% across climate-related risks, while some independent assessments indicate household coverage of only around 8%. When losses are uninsured, more of the recovery cost is transferred directly to households, businesses and public budgets.
Insurance coverage remains below half across climate risks.
Independent estimates point to very low household insurance coverage.
Bulgaria in European perspective · 1980–2024
a) cumulative losses per capita; b) share of insured losses.
Adaptation is not only an environmental necessity. It is an economic investment.
Earlier World Bank modelling found that without adaptation, climate impacts could erase Bulgaria’s cumulative economic growth by 2050. Estimated returns on sectoral adaptation investments range from several times to more than 700 times the amount invested.
The value of prevention rises when future losses, infrastructure resilience and avoided disruption are considered together.
Non-compliance with environmental standards also carries an economic cost.
Beyond health and environmental damage, regulatory non-compliance can create additional costs for companies and the state, including legal uncertainty and potential financial penalties.
The separate dispute concerning the permit of Maritsa East 2 remains unresolved, preserving regulatory and financial uncertainty.
Water availability is becoming an economic constraint for coal-based power generation.
The Maritsa East complex, which concentrates around 90% of Bulgaria’s coal power generation, relies heavily on the Sazliyka and Tundzha rivers for cooling water.
Estimated additional requirement by 2040 if coal generation continues beyond 2030.
Approximately 1.34 times the volume of Zhrebchevo reservoir.
As dry-season river flows decline, competition for water can intensify between energy production, settlements, agriculture and industry.
Climate and energy risks are not distributed equally across households.
Income, housing quality, energy expenditure and the ability to invest in efficiency strongly influence how well households can adapt to both energy-price changes and more frequent climate extremes.
Share of Bulgaria’s population exposed to poverty risk.
A key indicator of energy and climate vulnerability.
Climate resilience is ultimately an economic resilience issue.
Higher disaster losses, limited insurance coverage, water stress, regulatory risks and energy poverty reinforce one another. The economic burden is therefore shaped not only by climate hazards, but by the capacity to invest before losses occur.
Well-targeted adaptation and social investment can reduce both climate vulnerability and the unequal distribution of its costs.
Chapter author: Assoc. Prof. Dr. Maria Trifonova, Faculty of Economics and Business Administration, Sofia University “St. Kliment Ohridski”.
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